Question 1

If a company records inventory purchases at standard cost and also records purchase price variances, prepare the journal entry for a purchase of widgets that were bought at $7.45 per unit and have a standard cost of $7.15. The total amount owed to the vendor for this purchase is $33,525.

Accepted Answer

The answer of If a company records inventory purchases at...

Question 2

At the end of the fiscal year, variances from standard costs are usually transferred to the:

Accepted Answer

A)  direct labor account 
B)  factory overhead account 
C)  cost of goods sold account 
D)  direct materials account

Question 3

Standard costs serve as a device for measuring efficiency.

Accepted Answer

A) True 
 B)False

Question 4

If employees are given bonuses for exceeding normal standards, the standards may be very effective in motivating employees.

Accepted Answer

A) True 
 B)False

Question 5

Calculate the variable factory overhead controllable variance using the above information:

Accepted Answer

A)  $8,981.75 Favorable 
B)  $7,280.75 Unfavorable 
C)  $8,981.75 Unfavorable 
D)  $7,280.75 Favorable

Question 6

Normally standard costs should be revised when labor rates change to incorporate new union contracts.

Accepted Answer

A) True 
 B)False

Question 7

The following data is given for the Taylor Company:

Accepted Answer

The answer of The following data is given for the...

Question 8

Calculate the Total Direct Labor Variance using the above information

Accepted Answer

A)  $2,051.25 Favorable 
B)  $2,051.25 Unfavorable 
C)  $2,362.50 Unfavorable 
D)  $2,362.50 Favorable

Question 9

If at the end of the fiscal year the variances from standard are significant, the variances should be transferred to the:

Accepted Answer

A)  work in process account only 
B)  cost of goods sold account only 
C)  finished goods account only 
D)  work in process, cost of goods sold, and finished goods accounts

Question 10

Standard costs are divided into which of the following components?

Accepted Answer

A)  Variance Standard and Quantity Standard 
B)  Materials Standard and Labor Standard 
C)  Quality Standard and Quantity Standard 
D)  Price Standard and Quantity Standard

Question 11

Which of the following is not a reason standard costs are separated in two components?

Accepted Answer

A)  the price and quantity variances need to be identified separately to correct the actual major differences. 
B)  identifying variances determines which manager must find a solution to major discrepancies. 
C)  if a negative variance is over-shadowed by a favorable variance, managers may overlook potential corrections. 
D)  variances brings attention to discrepancies in the budget and requires managers to revise budgets closer to actual.

Question 12

A variable cost system is an accounting system where standards are set for each manufacturing cost element.

Accepted Answer

A) True 
 B)False

Question 13

The Flapjack Corporation had 8,200 actual direct labor hours at an actual rate of $12.40 per hour. Original production had been budgeted for 1,100 units, but only 1,000 units were actually produced. Labor standards were 7.6 hours per completed unit at a standard rate of $13.00 per hour. Compute the labor time variance.

Accepted Answer

A)  9,880F 
B)  9,880U 
C)  7,800U 
D)  7,800F

Question 14

Financial reporting systems that are guided by the principle of exceptions concept focus attention on variances from standard costs.

Accepted Answer

A) True 
 B)False

Question 15

The following data is given for the Harry Company:  Overhead is applied on standard labor hours.
The direct labor time variance is:

Accepted Answer

A)  6,000F 
B)  6,000U 
C)  33,000U 
D)  33,000F

Question 16

The following data is given for the Bahia Company:  Overhead is applied on standard labor hours.
The factory overhead controllable variance is:

Accepted Answer

A)  $65U 
B)  $65F 
C)  $540U 
D)  $540F

Question 17

The standard costs and actual costs for direct labor for the manufacture of 2,500 actual units of product are as follows:  The amount of the direct labor rate variance is:

Accepted Answer

A)  $2,960 unfavorable 
B)  $4,500 favorable 
C)  $2,960 favorable 
D)  $4,500 unfavorable

Question 18

The following data is given for the Taylor Company:

Accepted Answer

The answer of The following data is given for the...

Question 19

Calculate the fixed factory overhead volume variance using the above information:

Accepted Answer

A)  $1,701 Favorable 
B)  $4,866.75 Unfavorable 
C)  $1,701 Unfavorable 
D)  $4,866.75 Favorable

Question 20

Match between columns
                        Premises: Favorable cost variance
Currently attainable standard
Nonfinancial performance measure
Unfavorable cost variance
Ideal standard

Accepted Answer

The Answer of Normal standard and Theoretical standard and An is...

Exam 7: Performance Evaluation Using Variances From Standard Costs

If a company records inventory purchases at standard cost and also records purchase price variances, prepare the journal entry for a purchase of widgets that were bought at $7.45 per unit and have a standard cost of $7.15. The total amount owed to the vendor for this purchase is $33,525.

At the end of the fiscal year, variances from standard costs are usually transferred to the:

Standard costs serve as a device for measuring efficiency.

If employees are given bonuses for exceeding normal standards, the standards may be very effective in motivating employees.

Calculate the variable factory overhead controllable variance using the above information:

Normally standard costs should be revised when labor rates change to incorporate new union contracts.

The following data is given for the Taylor Company:

Calculate the Total Direct Labor Variance using the above information

If at the end of the fiscal year the variances from standard are significant, the variances should be transferred to the:

Standard costs are divided into which of the following components?

Which of the following is not a reason standard costs are separated in two components?

A variable cost system is an accounting system where standards are set for each manufacturing cost element.

Financial reporting systems that are guided by the principle of exceptions concept focus attention on variances from standard costs.

The following data is given for the Harry Company: Overhead is applied on standard labor hours. The direct labor time variance is:

The following data is given for the Bahia Company: Overhead is applied on standard labor hours. The factory overhead controllable variance is:

The standard costs and actual costs for direct labor for the manufacture of 2,500 actual units of product are as follows: The amount of the direct labor rate variance is:

The following data is given for the Taylor Company:

Calculate the fixed factory overhead volume variance using the above information:

Match the following terms with the best definition given.